Era of cheap energy over – Germany’s grid agency boss

Electricity prices will be permanently high, Klaus Muller warns.

Households in Germany will continue to struggle with high electricity and heating costs amid the cost-of-living crisis, Der Spiegel reported on Wednesday, citing the country’s Federal Network Agency.

The warning comes despite the recent fall in household energy prices, which have decreased 4.5% this year up to November 2023.

“The era of cheap energy is over, at least as long as we continue to consume large quantities of conventionally generated energy,” the head of the Federal Network Agency, Klaus Muller, was quoted as saying in an interview with the Rheinische Post.

Although wholesale electricity prices have “fallen significantly” compared to 2022, the price level is still higher than before the start of the Ukraine conflict, he reportedly said, adding that “nothing will change in the near future.”

The energy regulator noted that an average four-person household will pay €120 ($133) more in network fees per year due to the government’s decision to eliminate the previously planned €5.5 billion subsidy. Network operators will pass the price rise on to customers, Muller assumed, predicting, “Sooner or later, the costs will reach all consumers, regardless of when the changes are implemented.”

Germany’s transmission system operators reportedly announced in mid-December that the grid fees will rise from 3.12 cents per kilowatt hour in 2023 to 6.43 cents next year.

Germany, which relied on Russia for 40% of its gas demand before 2022, was among the hardest hit by the reduction of Russian energy supplies last year. Deliveries were either significantly curtailed or entirely halted after the EU imposed sanctions on Moscow in response to the Ukraine conflict, and the Nord Stream pipelines delivering Russian gas to Germany mysteriously blew up.

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